updated 10/27/2004 6:04:59 PM ET 2004-10-27T22:04:59

Sony Corp. announced a price more fitting of a video-game machine than a slick movie-playing gadget for its new PlayStation Portable — 19,800 yen ($186).

Ken Kutaragi, Executive Deputy President in charge of Sony's game business, said he thinks consumers will be pleasantly surprised by the price for the device, which he said may be worth twice as much.

But he acknowledged the Japanese electronics and entertainment giant doesn't expect to turn a profit on the machine until the fiscal year that starts April 1, 2005.

The PlayStation Portable, or PSP, goes on sale in Japan on Dec. 12. Dates and prices for the United States and Europe are still undecided, although overseas sales are being planned for the first quarter of next year.

The PSP is Sony's entry into handheld game machines — an area now dominated by the Game Boy series from Japanese rival Nintendo Co., which makes Super Mario and Pokemon games.

The PSP, which uses a new disk format, is being billed not only as a game machine but also as a mobile gadget for watching movies and listening to music files. But such uses will have to wait.

The standard for films was still under discussion with several movie studios, and a movie lineup and download services won't be announced for several months, Kutaragi said.

Sony plans to sell 200,000 PSP machines in the initial shipment, 500,000 by the end of this year, and 1 million by March 31, 2005, in Japan, Kutaragi said.

Analysts have said the price will be key in determining how well the machine does against Game Boy.

They had expected a price of about 30,000 yen ($280) because of the machine's sophisticated functions.

Nintendo, based in Kyoto, has already announced that the Nintendo DS, a revamped Game Boy Advance with two screens, will go on sale for $150 in the United States Nov. 21 and 15,000 yen ($140) in Japan on Dec. 2.

Kazuya Yamamoto, analyst at UFJ Tsubasa Securities Co. in Tokyo, said PSP's fate depends heavily on the movies and music that will become available.

"Sony put up a good fight by setting a price that's cheaper than expected," Yamamoto said. "But everything still depends on how widespread it can become as a game machine."

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